Price of Oil Rising Makes Gas Pump Wars Inevitable

In the 1980’s and 1990’s, gasoline prices in the United States were at all-time lows because of new discoveries of large oil supplies in the Middle East and other regions and because of a relatively small demand for those large excess supplies of oil. In the last decade, however, the sharp rise in demand for petroleum products, especially in China, has created a dire situation where demand has put a strain on existing supplies, forcing oil companies to inflate the price of oil per barrel, reaching all-time highs.

Because the world’s crude oil supplies serve as the raw material from which the gasoline that fuels the population’s millions of vehicles is made, the higher prices at the gas pump reflect the rising price of the crude. The high expense of crude is passed all throughout the different stages of production along its way to the filling station. Crude oil must be refined into the gasoline motor vehicles require. Refineries are feeling the crunch high crude prices have created and refining costs have risen similarly as efforts to create balance and keep profit margins advantageous for refining operations continue, while attempting to keep up with rising demand. Refining capacity is inadequate to keep up with surging demands. If refining capacity were higher across the board, perhaps gasoline prices would not tend to be so influenced by the rising rice of crude oil. Distribution costs have risen as well. Distributors, motivated by demand are doing their best to keep up with high transportation costs dictated by the high price of fuel. A cyclic situation exits where distributors are paying high costs using fuel-powered tankers and eighteen-wheelers to transport fuel to the clamoring consumer base at home and abroad.

Foresight would have helped the oil industry maintain its edge and efficiency. When supplies were at record amounts, larger portions of the profits should have been reinvested into new technologies and capacity research. This reinvestment would have helped in all areas of fuel production, from the well, to the gas pump, to the tank; making operations much more efficient and less affected by dwindling supplies. It is hard for motorists to be sympathetic to the oil industries “plight” with large outfits like Exxon Mobil achieving its highest profit in history in 2007, reaching $39.5 billion. Smaller, private companies like Triple Diamond Energy Corp, of Texas, are developing new technologies to help fill the gaps, providing consumers fair prices of refined fuel to help boost the economy of the United States.

About the Author: Robert Jent is the president of Triple Diamond Energy Corp. Triple Diamond Energy specializes in acquiring the highest quality prime oil and gas properties. For more information, visit www.triplediamondenergycorp.blogspot.com.